These are the slides from Omer Enbar's workshop at Product of Things Conference in Tel Aviv on July 2018: Who this workshop is for: This workshop is for those who want to establish a profitable product management environment in their organization After this workshop you will be able to: - Know the trigger that will raise your customer’s willingness to pay - Understand the challenges of each link in your product’s distribution chain - Use different methods to help your company stay alive and your product profitable What is covered: - Design for cost: how to set COGS/BOM and target price for your product - Know your margin, and deducing your target sales, team size and burn rate - Make a simple product: how to not over design and make everything simple - Optimizing online marketing - Overcoming the distribution and retail challenge In this workshop, Omer will share his experience as the CEO of Sensibo, presenting some of his insights and unique methods for building and managing profitable IoT products.

1. Workshop by Moriya Kassis
Your challenge
is not to sell products but
to profitably manage products
Workshop by Omer Enbar,
Chief Executive Officer at

2. Let’s Productise!
I am Omer Enbar
You can find me at omerenbar
2omer.enbar

3. AGENDA
1. The the dangers of over engineering
2. COGS, Pricing, Margins & Cash flow
3. Online sales
4. The power of IoT
3

4. The danger of over engineering
A brief history of Sensibo’s products & how
to deliver a good product in a timely
manner 4
1

5. SIMPLIFY
You don’t have the resources, be exact and
simplify
5

6. Sensibo 1st Generation
6

7. Sensibo 1st generation - trying to solve everything
▰ Hub + Pod
▰ Batteries
▰ 6LoWPAN + Bluetooth
▰ Unique round design
▰ Sensors: temperature, humidity, light,
vibrations, iBeacon
▰ Slick design
7

8. Workshop Questions
8
▰ What are the expected engineering issues
with this 1st gen product? Can it be made
simpler?
▰ Think of your product:
▻ What are the expected engineering
issues?
▻ Can they be avoided?

9. Sensibo 1st generation - we got everything wrong
▰ Hub + Pod
▰ Batteries
▰ 6LoWPAN + Bluetooth
▰ Unique round design
▰ Sensors: temperature, humidity, light,
vibrations, iBeacon
▰ Slick design
9

10. Sensibo Sky
● 1 Device
● Connects to power
● WiFi
● Sensors:
temperature, humidity
Simple, Successful

11. How 2nd gen is much better than 1st
11
● Over complication hardware - the COGS increase!
● 2 products (hub + pod) make it a logistical hell
● We never used the bluetooth, light and vibration sensors
● Trying to work with batteries took months of development, and continued to
haunt us to the last day
● Each sensor added (much) more work in development. Time and money that
you do not have.
Trying to do it all on the 1st
generation is dangerous

12. Pricing, COGS, Margins & Cash flow
What does it take to be profitable?
12
2

13. UP YOUR
MARGIN
Your margin is everything, make sure you
understand its impact
13

14. Workshop Questions
14
▰ You want to sell your product for $99, how
much should it cost you?
▰ What are the parameters to be
considered?
▰ What is the cost associated with selling the
product?

15. Brick & Mortar Breakdown
▰ Things to consider if you are going to
sell in stores:
▻ Shipping
▻ VAT
▻ Retail
▻ Distributor margin
▻ Marketing
15

16. Workshop Questions
16
▰ Think and write the cost breakdown for
selling in a retail store.

17. Brick & Mortar Breakdown
17
Price Cost/Margin
MSRP (Price for customer) $99
VAT $84 17%
Retail margin $60 40%
Shipping & Logistics $55 $5
Returns $53 3%
Marketing $50 5%
Distributor Margin $41 20%
Your Price? ?

18. Workshop Questions
18
▰ Think and write the costs involved in
selling online. Try to think of everything?
▻ Where do you sell?
▻ How do you bring customers?
▻ Where do you store the items? And
how do you ship?

19. Online Sales Breakdown
▰ Things to consider if you are going to
sell online:
▻ What’s the target CPA?
▻ What does it mean?
▻ Sales fees (Amazon, shipping,
handling, storage, payment
processors)
19

20. Workshop Questions
20
▰ How many products do you need to sell each
month to break even?
▰ Scenario:
▻ Your overall margin is 30%
▻ You sell 1000 units per month. Your gross profit
is $30k
▻ Congratulations! If you want to break even,
your team size is max 3 people.
▻ How many units do you have to sell to have a
team of 15?

21. Workshop Questions
21
▰ In a hardware company you have to manufacture.
This limits your growth.
▰ Challenge:
▻ Your company has $100k available
▻ COGS are $20, margin is $20 and your monthly
burn rate is $40k (team of 4)
▻ It takes 6 months to manufacture and sell the
stock; you sell ⅙ each month
▻ Without raising money or taking a loan, how
much money would you have in 1 year?

22. Workshop Answers
22
▰ Your company is bankrupt before the year is out.
▰ So you can produce 5000 units, and you sell
830/month
▰ You make 830*20 = 17k
▰ But your burn is $40k, so you are losing 23k/month
or 276k/year
▰ What happens if you sell within 4 months at a rate
of ¼ of your stock monthly?
▰ The problem: you can only grow at a rate that is
proportional to your available cash

23. Online Sales
Why you should do it
23
3

24. SALE
ONLINE!
If your product is right for this channel,
prefer online over other channels
24

25. Advantages of online channels
▰ You own your future - independent
▰ Sell cycle is immediate
▰ Immediate feedback
▰ Paid immediately
▰ Measurable
▰ Amazon
▰ Pre-orders (e.g., kickstarter)
25

26. BRAND
Every dollar put online increases your
brand - even if you are not ROI positive on
the direct channel
26

27. Optimize your online channels
▰ Don’t assume. Test. Use Google
Optimize
▰ Be in control of your site
▰ If you aren’t developing the site
yourself, have very close ties with your
site developers
27

28. Anecdote
28
Our product was out of stock
There was a banner saying:
“Back Order - ships in a month)
Once the product was back in
stock, we removed the banner
and the conversions dropped
immediately and significantly.
Why? What did we do?

29. Anecdote (cont.)
29
Removing the urgency caused
conversions to drop

30. The Power of IoT
How to leverage your connected product
to make everything tick
30
4

31. AUTOMATE
You can make a very efficient operation
when everything is connected
31

32. The Power of IoT
▰ Prevent fraud
▰ Prevent copying the product
▰ Automate engagement and reviews
▰ Make support much better
▰ Automate logistics
32

33. Anecdote
33
A customer bought from
Amazon.com a product that
didn’t work
He sent us this photo

34. THANKS!
Any questions?
You can find me at
fb.com/omer.enbar & omer@sensibo.com